Public-Private Partnership

Maryland DOT and the Maryland Transit Administration pursued an innovative solicitation approach with the Purple Line. The State has solicited a single private partner (concessionaire) who will be responsible for designing, constructing, operating, and maintaining the project, and the private partner will also help finance a portion of construction. On March 2, 2016, Governor Larry Hogan announced Purple Line Transit Partners as the concessionaire for the Purple Line. This partnership with private industry, commonly referred to as a public-private partnership (PPP or P3), will promote the successful delivery of the Purple Line. P3 Contract provided below.

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While Book 4 consists of the Contract Drawings referenced by the P3 Agreement, the Concessionaire will continue to work alongside MTA/MDOT after award to further develop and complete the design as the project progresses.

Purple Line P3 FAQs

What does P3 stand for?

P3 is an industry abbreviation for a Public-Private Partnership. It is synonymous with the term “PPP”. The phrase “Design-Build-Finance-Operate-Maintain” (DBFOM) is also used within the industry for the type of P3 that MDOT is planning to pursue for the Purple Line.

Does P3 make the Purple Line more expensive?

No. Despite the higher costs of private financing, MDOT forecasts that efficiencies gained by transferring risk to the private partner will make the project slightly less expensive than if it was delivered using conventional methods.

Does P3 reduce the need for State funding?

Yes. While MDOT is still responsible for upfront project development costs like preliminary engineering and right of way acquisition and for a portion of the capital cost, some of the capital cost will be financed by the private partner.

Is P3 the same thing as privatization?

No. The State will retain ownership of the Purple Line throughout the life of the contract and all assets will be the State’s to operate and maintain at the end of the contract.

What responsibilities will the State have?

The State will still pay for part of construction, provide oversight, set fares, and specify service levels. It can specify the general appearance of stations and other project elements, although providing proposers with more flexibility increases the potential for cost savings. The State also anticipates retaining responsibilities associated with federal environmental documentation, right of way acquisition, and quality assurance and oversight.

How did MDOT/MTA select a private partner for the Purple Line?

MDOT/MTA used a competitive and extensive solicitation process to select the Purple Line concessionaire. Bids were received from four world-class teams which were evaluated over a two month period.

How will the State compensate the private partner?

In return for operating and maintaining the project at a specific level of service along with financing a portion of the design and construction, the State will pay the private partner annual service payments (formally called “availability payments”) throughout an approximately 30 year operating period. Deductions will be made from these payments if the contractor does not meet pre-determined performance targets.

Where has the P3 approach been used for other rail projects?

This type of P3 approach is used extensively for rail projects in Canada and abroad. It has also been used for a rail transit project in Denver (known as the Denver Eagle P3 project).

Is there a precedent for P3s in Maryland and the Metro Washington Region?

In recent years, Maryland has successfully entered into two major transportation P3s: Seagirt and the I-95 Travel Plazas. In 2009, the Maryland Port Administration (MPA) and Ports America Chesapeake, LLC entered into a 50-year P3 agreement for redevelopment and long-term management of the Seagirt Marine Terminal at the Port of Baltimore. In 2012, the Maryland Transportation Authority (MDTA) entered into a 35-year P3 agreement with Areas USA to redesign, rebuild, and manage Maryland House and Chesapeake House, the two Travel Plazas along I-95.